UPDATED: The former CEO of PledgeMusic — the direct-to-fan music marketplace that filed for liquidation earlier this year, leaving thousands of musicians unpaid — has been accused of improper financial conduct by a member of the band Failure, one of the artists who are owed money by the company. The executive has denied the allegations to Variety and says he is exploring legal action.
The musician, Ken Andrews, alleged in a long Facebook post Friday afternoon that former PledgeMusic CEO Dominic Pandiscia — who left the company in June of 2018 and for the past several months has been consulting for a label that is partnered with management/publishing company Primary Wave — ensured that Primary Wave artists were among the few who were paid the money they were owed by Pledge before its collapse. Andrews does not present evidence of these claims; the post was elevated to news when it was reported by Brooklyn Vegan, which apparently did not contact the accused parties for comment and has since deleted the post.
After speaking with Variety on Friday night, Pandiscia — who is working as a consultant for Gaither Music, a gospel and Christian label that partnered with Primary Wave earlier this year — made the following statement: “The allegations made against me by Ken Andrews are patently untrue and fabricated. It is irresponsible for any publication to print such inflammatory rhetoric without fact-checking or providing opportunity for comment. Had they done so, it would have cleared up the errors and falsehoods. This leaves me no choice but to explore options for legal action for libel and slander.” He declined further comment.
A Primary Wave representative denied all allegations against the company made in the post and declined further comment.
Contacted by Variety on Saturday, Andrews responded: “If the statements I made are all patently false, as Mr. Pandiscia claims, then why didn’t Mr. Pandiscia take the opportunity last night to actually ‘clear up the errors and falsehoods’ directly to the journalist he spoke to? Thousands of Pledge victims, both artists and customers, are all sitting here patiently waiting for a straight talk explanation of what happened.”
The collapse of PledgeMusic has damaged the careers of thousands of musicians, many of whom found themselves deeply in debt when money promised from the company for recording sessions, promotional campaigns, tours, merchandise fulfillment and more did not arrive.
Andrews, who says his band is owed $75,000 by Pledge, lists several artists represented by Primary Wave, including Brandy, CeeLo Green, Melissa Etheridge, Fantasia, Cypress Hill and Chris Robinson of the Black Crowes, but only names Etheridge as one who was paid; contacted by Variety, a rep for the singer did not immediately have a response. Andrews did not present evidence of this claim; PledgeMusic’s website, which listed its past campaigns, has gone offline.
Andrews also alleged that under Pandiscia’s watch, Pledge essentially used the money artists had paid to fund their campaigns on company expenses, such as salaries and office space. He did not present evidence; that accusation has been leveled speculatively by certain individuals against Pandiscia in the past, but others, including former Pledge employees, have claimed to Variety that the company’s board of directors is the actual culprit in that situation; another source said the company actually moved to less-expensive offices during Pandiscia’s tenure. To date no one has commented on the record about the matter.
Variety broke the news of PledgeMusic’s financial troubles and unpaid artists in June of 2018. Shortly after that article published, several of the artists who were owed substantial amounts of money by Pledge and had taken their complaints to social media or the press were suddenly paid.
In Andrews’ post, which is titled “The Pledge Music – Primary Wave Connection,” he speaks of Failure having run a successful campaign around a 2015 album and returning to the company with its next album in 2018. By that time reports of financial troubles at the company had spread, but Andrews says the band was assured they were “temporary cash flow issues that were being ironed out,” he wrote. He alleges that the company’s financial troubles began after Pandiscia was hired as CEO in April of 2016, and that after he began consulting for Gaither in 2018, artists represented by Primary Wave who were owed money by Pledge were all paid, although he did not cite details or evidence.
Pledge was more than $7.4 million in debt when it entered liquidation, and it is “unlikely” that artists and others owed money by the company will be paid, according to a report from the bank-appointed receiver.
“I do not anticipate that I will need to contact you again because there is unlikely to be a payment to creditors in this case,” concludes the report from official receiver S. Rose, dated Oct. 21, 2019 and obtained by Variety. “If that changes I will contact you.”
While many of the affected artists — who found themselves on the hook for thousands of dollars when Pledge began failing to make payments last year — have threatened legal action against the company, that may be a slippery slope: In the report, the company’s board says its legal advisors “indicated that Pledge monies were not trust monies,” which means the money paid by fans belonged to Pledge, not the artists — even though the premise of the company was for it to be a conduit through which fans would pay artists for everything from albums and CDs to merchandise and even private performances.
Variety spoke with attorney Christian Castle about the situation in August, who advised artists and others owed money to hire an insolvency lawyer in the UK or, failing that, to email the Official Receiver the basics of the situation and how much they are owed. However, the prospects of receiving any money now seem grimmer than ever. As part of an article published this week unpacking the receiver’s statement, Castle asks a number of relevant questions. “Why did the board seek legal advice about whether the pledge monies were or were not trust monies? … Who gave them this advice, what prompted the board to ask for it, when did they ask for it and what happened after they got the advice? Did the lawyer also tell the board that they could tell the public they were soliciting funds for one purpose and then use the money for an entirely different purpose for their or the company’s own benefit?”